Ssangyong has cleared a significant hurdle in its restructuring plans today with the news that a South Korean court has given it approval to put plans into action.
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The court confirmed a recent Samil PricewaterhouseCoopers assessment that the manufacturer had a greater value as a going concern than its liquidated value, and ordered Ssangyong to submit its full restructuring plan by mid-September.
Ssangyong says that much of this is already in place, including a new model programme and a reduction in the workforce by over a third.
Paul Williams, managing director of distributor Koelliker UK Ltd. said: “This is the news we were hoping for and it means that Ssangyong now has the lifeline it needs to implement major changes. The future will continue to be difficult, as it is throughout the auto industry, but the result should mean a leaner, much more efficient Ssangyong. We already know that there will be a broader range of passenger cars using the latest petrol, diesel and hybrid technology, and the first – the C200 – will go into production later this year. Our dealers can now go forward with renewed confidence.”
Ssangyong applied for, and was granted court receivership in February after the fall-out of the international credit crunch, a drop in demand and even higher raw material, oil and energy prices.
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By GlobalDataCourt receivership is similar to US Chapter 11 status, giving the company protection from creditors and time to formulate and implement a corporate resuscitation plan.
Under the arrangements, the court appointed former Hyundai Motor president Lee Yoo-il, and SYMC vice-president in charge of finance, Park Young-tae as co-legal administrators.
However, the Ssangyong labour union yesterday launched a full strike in protest of the company’s restructuring plan’s layoffs.
Ssangyong management has reportedly said it will consider a lockout.
Ssangyong management said in a statement, “We will strictly respond to the union’s illegal strike in accordance with law and principles. The restructuring plan is inevitable for our survival and revival and must continue as planned.”
Local industry observers say that the industrial action in response to layoffs was widely expected.
